Less than two weeks after agreeing to purchase a home at Hong Kong’s Victoria Peak for HK$721.88 million ($92.1 million), an unnamed buyer has walked away from the deal, forfeiting a HK$36 million deposit, according to Hong Kong public records.
The anonymous Hong Kong identity card holder had agreed on December 31st to purchase House No 16 at Mount Nicholson, a luxury development by Wheelock & Co together with Nan Fung, but abandoned the contract, and his or her deposit, as concerns grow over the outlook for the city’s housing market in 2019 and further down the road.
The failed sale at Mount Nicholson, a development which once paced the seemingly inexorable climb in Hong Kong’s housing prices, comes despite the buyer of House No 16 having purchased the home at a discount, compared to earlier deals last year, and is likely to send further chills through an anxious property industry.
Unnamed Buyer Backs Out of Luxury Deal
The buyer had agreed to buy the 7,978-square-foot (741 square metre) villa at Mount Nicholson for the equivalent of HK$90,484 per square foot after beating out a pair of competing bidders for the prestige address, according to officials from Wheelock & Co who spoke with the South China Morning Post. However, the lure of the home’s private garden, rooftop and swimming pool in the end were insufficient to overcome a $4.6 million case of buyer’s remorse.
The agreed price for the luxury home was already 7.4 percent less than the HK$97,695 per square foot paid for the nearly identical 7,984-square-foot “House No. 17,” which sold for HK$780 million in April. In March, Longfor Properties co-founder and Junson Capital boss Cai Kui paid HK$151,785 per square foot for a home at Mount Nicholson, making it the most expensive home ever sold in Hong Kong by unit of area.
Apart from Cai, other mainland buyers have targetted homes in Mount Nicholson with Lin Zhongmin, chairman of Shenzhen-based developer Chunan Group and Zhu Xingliang, founder of Suzhou Gold Mantis Construction Decoration, both having purchased apartments there within the last 18 months.
Hong Kong Housing Market Cools Off
While the erstwhile buyer of House No 16 has not commented on the decision not to follow through with the Mount Nicholson purchase, the recent downward change in direction for Hong Kong’s housing market is the leading suspect in this case of a disappearing deal.
Statistics issued earlier this month from the Hong Kong Rating and Valuation Department show that overall home prices have slid around 7.2 percent since peaking in July. Average home prices for Hong Kong Island’s largest homes, which the department puts at 1,722 square feet or more, are down by about 6 percent from July, according to the department’s price index.
The slide in housing prices has led many buyers to walk away from recently signed purchases, according to brokers active in the market. Figures announced last month by the Hong Kong Monetary Authority showed that residential mortgage applications had dropped 12.3 percent in November, compared to October, reaching just 9,431 requests for home loans during the month, with mortgage approvals also sliding.